Tariff pause: Freight rates may rise on 'front-loading'

NEW DELHI: US President Donald Trump's reciprocal tariff policy could significantly drive up freight rates for Indian exporters, fuelled by front-loading of orders amid a volatile and uncertain global trade environment.

With the 90-day tariff pause on imports from India, freight rates could see an initial double-digit spike as exporters rush to book consignments, industry experts said. This increase, adding to India Inc's cost burden, could mirror global trends, where freight rates rose 3% to $2,265 per 40-feet container (as per Drewry's World Container Index) last week.

On April 9, Trump announced a 90-day pause on reciprocal tariffs, lowering them to 10% for several countries, including India, but excluding China. Ajay Sahai, DG and CEO of the Federation of Indian Export Organisations, told TOI: "The exporters' rush to ship consignments before the 90-day deadline is expected to lead to a double-digit spike in freight rates to the US. Post-deadline, rates could soften."

For now, the industry is in a wait-and-watch mode. Christian Roeloffs, co-founder and CEO of Container xChange, an online container logistics platform for container trading, leasing, and management, said: "Prices are increasing right now, both in typical loading as well as in discharging locations. Essentially, the uncertainty and cancelled shipments are soaking up container inventory. Our members are very much in a wait-and-see mode. Most of them are still expecting structural container price decreases."

Industry experts noted that the domestic container logistics sector stands at a critical juncture, grappling with global trade disruptions and Red Sea instability, leaving stakeholders uncertain about operational stability. Moreover, India relies heavily on leasing containers from foreign players, particularly China. The recent push for domestic shipbuilding, backed by a Rs 25,000 crore Maritime Development Fund, could change this, but industry experts caution that true self-reliance will take years.

The volatility and complexity of the shifting policy landscape place global logistics at the forefront, highlighting the importance of agile and robust supply chains amid trade tensions. "It's crunch time for transport and logistics companies, and we are fully geared up for the task. We have often faced challenging situations where companies' supply chains were put to the test - and we are well-equipped to deliver solutions. We have previously seen that an integrated logistics portfolio and control over our own assets become crucial when the unexpected creates a need to either slow down or speed up," says Karsten Kildahl, global chief commercial officer of AP Moller-Maersk.